1000 petals by axinia

the only truth I know is my own experience

The capitalism is about to collaps… what’s next? July 16, 2011

image by axinia

Today many, including economists and financial experts are talking about the end of the existing financial system due to a simple mathematical law: Compound interest follows the existing monetary system an exponentially growing curve (= off 1 is 2, 4, 8, 16, etc. – as opposed to linear growth from = 1, 2, 3, 4, etc.), and unlimited growth exponentially is mathematically impossible. Any system with exponentially growing system is an ultimately self-destructive, the end is predictable. In nature, quality growth prevails: Humans, animals and plants grow quantitatively until they have reached their optimal size, then they only grow more qualitatively. Exponentially growth occurs naturally only in connection with illness and death, eg the disease like cancer behaves exponentially (from one cancer cell, 2, 4, 8, etc.). The interest from the mechanism resulted in permanent growth of the forced economy is in irresolvable conflict with the mathematical impossibility, with the known consequences of such an unbearable social imbalance and life-threatening environmental degradation.

This situation sounds hopeless (if interested to learn about truly shocking backgrounds, see Chris Martenson’s “The Crash Course Money”). Margrit Kennedy, however, offers in her book “Interest and Inflation Free Money”  1996 , a positive outlook, because it shows not only the problem but also offers a possible solution for me (as an economic layman) understandable, reasonable, sensible and feasible acts. Margrit Kennedy, was born in 1939 in Germany and has been working many years as an architect, town planner and ecologist in Germany, Nigeria, Scotland and the USA. Since her ecological projects have often been dismissed as uneconomical, she became aware that an environmental measure had to be measured with the money-creating power of money in the capital market. She began to compare the growth patterns in nature and in the monetary system and the causes of the pathological compulsion to understand economic growth, and the function of the monetary system and the dangers of an economic or ecological collapse. Margrit Kennedy assumes that very few people understand exactly how money works and how it affects their lives directly or indirectly. She holds four misunderstandings for the main obstacle to understanding the design flaw in the present monetary system:

 1)  Because of our own organic growth, we cannot imagine the real (self-) destructive effect of money growth. Margrit Kennedy denotes the interest rate as a “cancer in our social structure” .

2) We do not recognize the hidden effect of the interest rate mechanism in every price we pay interest portions are included (= the interest paid by the producer of the Bank for capital), in average include (without interest we would therefore theoretically richer by half) the price of goods and services for everyday life, 30-50% interest .

3) We believe that the current monetary system is all the same. In the present the monetary system does not take place by the interest rate a hidden redistribution of money from those who have less money than they need, to those who have more money than they need. 80% of the population pay more interest than they receive (about 10%), the ratio of paid and interest received is balanced, but 10% of the population received about twice as much interest as they pay, namely the portion that the first have lost 80% of the population. Margrit Kennedy calls this a far more subtle and effective form of exploitation than the one that Marx was trying to fix (this was, however, in his day not been so apparent as today, is taking place, the distribution of added value to an ever greater extent set forth in the monetary sphere).

4) We keep inflation for an implicit part of any monetary system, however the inflation is governments created specifically for the worst problems of rising debt (debt and debt interest rates grow faster in economies than incomes, which lead to the collapse must) be overcome, However, as this has a different form of taxation. The interest rate is (in addition to raw material shortages, wars and military spending) the main cause of inflation.

Margrit Kennedy argues that through interest and compound interest as the price one pays for money, money has itself become a commodity, and that most coveted of all commodities, goods and it is this character of money always causes destructive crises. She sees the solution in a return of money to its original function as a medium of exchange.It would require the abolition of interest. However, the interest is a necessary function in the existing monetary system: it keeps the money in circulation. Because if money is hoarded and not shared, this impedes the economy. Thus there is an interest rate as an incentive for those who have more money than they need to bring it to a levy in circulation. For these outstanding insurance function of the interest rate it would need a replacement.

 Margrit Kennedy is the brainchild of Silvio Gesell, a businessman who in 1916 formulated this in his book “The Natural Economic Order.” Society was established by observation of economy stagnation if interest rates were low, because money was withheld, and they prospered when interest rates were high, because money was made available, and that this cycle was subject to constant change . He realized that this phenomenon is due to the fact that money is in contrast to all other goods with virtually no “storage costs” can be retained, so there is a “liquidity benefit”, you can wait until the most advantageous price for the “commodity money” is reached is. His idea was to create a monetary system where money like any other commodity  caoused storage costs, then there would be an economy free from the ups and downs of currency speculation. He proposed to replace the interest rate by a circulation fee, so instead of rewarding those who have more money than they need, so they give it back in circulation, should those who hold back their money from circulation to pay a small toll. While interest rates represent a private profit, should constitute a public use fee income that is brought back into the circulation of money. Silvio Gesell called this money because it is interest free, “free money”, it later became the term “neutral money” was coined because it serves everyone and confers no unilateral advantages, such as the current money system.

But this is not a mere theory! In 1933 a highly successful experiment took place in Austria ( read more about it in my recent post here. )
I do not know if Margrit Kennedy’s approach is the last word, as far as solving the problems of the present monetary system – but I think it’s good to discuss possible solutions, and not just always to moan about the problem.

Should it really come to a collapse of the existing financial system (by experts of the Mayan calendar it may happen from the “fifth night” of the “ninth wave” [18 August to 4 September 2011]), it might help if we know alternatives, to know that a better future is possible.

(translation from a German text by Martina Breier)


13 Responses to “The capitalism is about to collaps… what’s next?”

  1. ulyana Says:

    great post, very relevant xx


  3. What’s next? English socialism as usual in terms of a co-architect of EUR B. Lieteaer’s “complementary currency” and a kind of Hanseatic League for Europe: or war because debt still has religious justification in the West.

  4. vinayakah Says:

    The answer on “whats next” depends on people of which will the next system consist…

    Basically, the current system is built up for approximately 60 (some say80) years of “growth”, than colaps, people loose money, war, huge financial groups will enlarge their power and steat more RESOURCES from ordinary people, that new building for another 60-80 years than colaps and so on….

    Much more important question is, what is happening today if you look around in the whole world. This view can bring more accurate answer on more important question – WHY? Globally you can see, there is an urge, from mighty financial groups to make the states, the government, and at the end the simple people get in the debt. The one, that can never be paid back.

    So lets ask who has the profit from this happening. The answer can find everyone by himself. And if it is the same people that are having the “rule”, they will most probably be not very happy if their system will change.

    So what will be next depends on each of us. Depens on a single point – do we realize our real identity and are we ready to realize that we can create the paradise? But only beyond that manipulated mental activity it is possible. Or we use our creative potential as free beings and create the paradise, the heaven on Earth, or our creative potential will be used by “The others” for creating hell on Earth. In the second part of hell, we can decide for example between the Orwel´s novel 1984, or Huxley´s novel Brave new world….. Depends on us…..

    p.s. and what if there will be not only one group of people? What if there will be more? Some living in hell, some in paradise, some in formless state, some…… 😉 Depends on EACH ONE of us…

    • axinia Says:

      dear vinayakah, I think I did not get your point here, what do you mean under the statement that it depends on EACH ONE?

      • vinayakah Says:

        ah, I see. I wanted to point out that in this point we cant hide behind some kind of collective happening, wait for this one that one, this, that…. It depends on each of us, we must take the responsibility individually, the recognition individually, the understanding….despite of anything.

        It has become a fashion to say “we do it together, so lets go!” or some other kind of noncense P.R. call. Its like to say “lets fall in love NOW, lets go!”. Or you are there or not, one cant order it. 😉 But if you find people that INDIVIDUALLY got the point, they form automatically the real “group”, or whatever one call it, and they are firmly connected through their inner state, not by external order…because they dont hang on others anymore, and they just go forward even if they are alone on the battlefield.

        The two guys in their famous novels (Orwel and Huxley) predicted very precisely the situation we live in today, and many thinkers of today debate their works with amazement….they just thought it will take much, much longer. It didnt…. But we are at the critical point, it is becomming quite acute, and it will go…where it will go, depends on each of us.

  5. karl G. Says:

    Wow, that sounds reasonable right, and therefore it is the surest guarantee
    ensure that it is of the incompetent idiots in the world’s governments
    Sitting is not implemented.

    Nor to complement the beginning of 1970-years, he published “The Limits of
    Growth, “the revised form: Donella and Dennis Meadows: The new
    Limits to Growth, German publishing house 1992nd Here it comes
    that our economic system based on perpetual growth (ie
    exponential growth) is based, may not be stable – simply because
    because in a finite world can not grow indefinitely. The authors
    estimate from their computer models (with no Mayan calendar) from that
    collapse of this economic system after 2000 will, with disastrous
    health and social consequences.

    The system is not (yet) collapsed because the developed countries it
    have learned to disguise the effects of pollution, etc.
    by outsourcing to the 3rd And exploitation of third world World. But the
    Collapse is inevitable. It is high time that this
    perverse economic and monetary system will be replaced by a better one. The
    with the crisis of the monetary system is a symptom of this collapse. Also
    the social problems are already emerging, there were already social
    Riots in France and Greece. In Austria the social
    Unrest probably come later. The Austrians are sluggish
    Subjects, who put up almost anything, but it is also with us
    . happen

    In my opinion, the State’s debt by one
    Reduce hyperinflation. Hyperinflation means: To make your monthly salary,
    Today you get, you can always buy more than 1kg in a week bread.
    Accordingly, less the debts are high as well. Elegant, is not it? Goes
    even at the expense of the average citizen, the rich get their
    Assets to preserve knowledge.

    Over the top? No way! It was after the first Weltkrig hyperinflation in
    Austria, my father told me about it. Accordingly, it was better off
    with paper money instead of fire up to buy with that money coals, because the
    Money that a kilo of coal cost, had a higher calorific value than coal,
    you got it. Because the money for one kilogram of coal filled several bags.

    I am telling you this so that everyone can already agree on what to us

    • Billibaldi Says:

      If only we had the option of burning money. Something like 99.99% of the money in the world has no physical existence.

  6. Billibaldi Says:

    I tell everybody we are headed to a “Star Trek” economy where money will be viewed a a barbaric relic of the dark ages when we did not know any better or did not have the technology. Until then we should tax the rich.

  7. […] Spiritual aspect of money: about the interest rate September 14, 2011 Filed under: thoughts — axinia @ 11:44 pm image by axinia   In her book “Interest and Inflation Free Money”  1996 Margrit Kennedy  offers an interesting  outlook on the main trouble with money – the interest rate. […]

  8. […] Spiritual aspect of money September 14, 2011 Filed under: thoughts — axinia @ 11:44 pm image by axinia   In her book “Interest and Inflation Free Money”  1996 Margrit Kennedy  offers an interesting  outlook on the main trouble with money – the interest rate. […]

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